2 Banks Protest Ban On Atm Surcharge

Fleet, First Union Want To Charge Fee As Issue Is Decided

November 17, 1998|By KENNETH R. GOSSELIN; Courant Staff Writer

Arguing that it will lose $15,000 a day in revenues, Fleet Bank told a Superior Court judge in Hartford Monday it should be able to levy a second ATM fee to non-customers in Connecticut while the legality of fee is tested in state courts.

Fleet is seeking a temporary injunction against an order issued last week by the state banking commission that halted ATM surcharges in Connecticut. The order came after a federal appeals court ruled the fee's legality should be decided in state courts.

Judge Samuel H. Teller did not render a decision Monday. But Teller set dates this week for Fleet and First Union, which has joined Fleet in seeking the injunction, to submit more information and for Attorney General Richard Blumenthal, who is representing the state, to respond.

Teller did not set a date for a decision.

Fleet and First Union told Teller Monday the lost revenue will permanently harm their banks because they will not be able to recoup the money. For non-customers, Fleet said, the $1 surcharge is voluntary and small. But Fleet said it loses thousands of dollars a day in revenue, the bank said.

``We have no way to recapture fees that are not charged,'' said Allan B. Taylor, a lawyer representing Fleet. ``We can't go back to non- customers.''

Taylor and Donald Frechette, a lawyer representing First Union, said they intended to submit cases to Teller that dealt with the kind of harm the banks are suffering.

The lawyers also argued that if the fee is ultimately found to be illegal in Connecticut, the money could then be refunded.

But Blumenthal countered that non-customers might be particularly hard to find, especially if they have moved or closed bank accounts.

``It's not so easy to get the surcharge money back,'' Blumenthal said.

Monday's court hearing is the latest development in a 22-month old case involving the surcharge in Connecticut. Fleet has been challenging State Banking Commissioner John P. Burke's opinion that existing state statutes do not permit the surcharge.

In October, a federal judge in New Haven ruled that statutes were written before the age of electronic banking. Blumenthal immediately appealed, arguing surcharges were unfair and unnecessary, but the federal appeals court would not forbid surcharging while it deliberated.

Last week, the appeals court ruled the dispute should be resolved in state courts, and Burke issued an order to three banks -- Fleet, First Union and BankBoston -- to stop surcharging.

Blumenthal told Teller Monday that the banking department is holding a hearing Dec. 3 at which Fleet and First Union could argue against the order. The order could be rescinded if the banks give compelling enough arguments for allowing the surcharge while the state courts deal with the case.

Many consumers already pay a fee to their own bank when they use another bank's machine, and part of the fee goes back to the bank whose machine was used. The surcharge comes on top of that fee, is deducted at the time of transaction and goes directly to the bank that owns the machine.